Tuesday, May 27, 2008

Why Companies Recruit Politicians to their Boards

City AM has an interesting article today asserting that a company's value rises if it has a politician on its board who is associated with the governing party. If they are right, expect to see a whole raft of ex Labour politicians lose some lucrative directorships and be replaced by people with good Tory connections.

And their evidence:Baroness Symons at BAPatricia Hewitt at BTGeorge Robertson at Cable & WirelessMary Francis (who?) at Aviva

Each of those companies have gone through problems and the appointment of a minor political figure will have made no difference to the share price. More likely the appointment of a lightweight director means they don't need a commercial problem solver.

do the companies hire members of the 'ruling' party for their brilliant business minds ? or perhaps for the political version of insider trading ?I think I know which..... so it is not surprising that MPs close to the decision makers are favoured